Power Company to Challenge Commission Ruling

Mississippi Public Service Commissioner Brandon Presley said he wants Entergy to reimburse rate-payers with checks for offenses found in a Dec. 9 FERC ruling, rather than credits to monthly bills.

Mississippi Power Company will file a motion this week asking the Mississippi Public Service Commission to reconsider its April 29 order for Kemper County IGCC Project. The MPSC approved the experimental coal-burning plant, however its conditions made it impossible for creditors to fund the plant, Mississippi Power contends.

The request will ask the PSC to explain the conditions it attached to approval of the plant. The conditions "would not allow the company to act in a fiscally responsible manner," Mississippi Power Spokeswoman Cindy Duvall said today in a statement.

"We respect the work of the commission on a very complicated matter in difficult economic times," Duvall said. "We hope they will reconsider these issues and work with us to find a solution to build the Kemper Project and keep rates for our customers as low as possible."

One of PSC's conditions was a cap on the cost of the construction of the plant at MPC's original 2009 estimate of $2.4 billion. The power company has never determined an exact price of the 582-megawatt facility for the commission. In March, however, MPC proposed to self-cap costs at $3.2 billion. Critics complained that this amounted to a 30 percent potential increase over the company's original $2.4 billion estimate.

The PSC also demanded that all monetary incentives the MPC claims to be available through federal grants, loan guarantees and tax credits be verified to avoid raising the cost of the Kemper County facility to Mississippi Power customers, who would have funded the construction through rate increases. A third condition was that MPC get all its required environmental permits in order, while a fourth condition demanded the company continue proving the cost-savings of the project starting in May 2011.

"[T]he commission finds that MPC's request for a facilities certificate, in its original form and as supplemented, does not satisfy the 'public convenience and necessity' requirement," commissioners wrote in their April 29 decision. "Having weighed all the potential benefits and costs, the commission finds that the proposal contains too many uncertainties to justify the ratepayers bearing the risk of these uncertainties in full."

Company officials informed the commission during February hearings that any change in the company's funding proposal would affect the company's credit rating.Mississippi Sierra Club Director Louie Miller remains vehemently opposed to the construction of the plant, and applauded MPC's decision not to commit to construction."So ends—hopefully—the greatest attempted boondoggle on Mississippi ratepayers MPC has ever attempted," Miller said.

MPC said the plant would create 260 new jobs, and 1,000 temporary jobs during construction, but critics argued that the company wanted to finance the project through customer rate increases. The Legislature passed a new state law in 2009 that actually made possible the company charging ratepayers' prior to construction of the plant—and offered no language assuring a rebate to customers should the company fail to complete construction of the plant for any reason.

Commission Chairman Brandon Presley was the only commissioner to vote against the permit arguing that the company and the commission "should wait until many of the uncertainties in this case are better known and, therefore, have a clearer picture of what resource ... would best serve the public interest." "Other options exist for the company in the interim that involve less risk to MPC customers than those posed by this project, at this time," Presley wrote.

Presley said he also suffered no pressure from either ratepayers or politicians to reverse his decision or upgrade the PSC's conditions, even though both Lt. Gov. Phil Bryant and Gov. Haley Barbour praised the new plant in many public forums. He added that he had received no calls from politicians during the PSC's one-year deliberation on approving the plant, and has received no calls from plant supporters since the PSC decision came down last month.

Posey said he stood behind the construction of the plant, but only insofar as ratepayers would reasonably allow.

"I'm hoping MPC will re-file something. Perhaps they'll file something, that we can take a look at, along the lines of the conditions. I'm personally for the plant, but I feel we made the best decision for the ratepayers' money," said Posey. "We wanted to make sure we were had everything on the table. But what MPC does after that is up to them."